Investigating the link between remittances and inflation: Evidence from the Philippines

College

Ramon V. Del Rosario College of Business

Department/Unit

Economics

Document Type

Article

Source Title

South East Asia Research

Publication Date

1-1-2020

Abstract

From a macroeconomic perspective, scholarly literature has established that remittances are inflationary because they fuel higher consumer spending through increased income. However, from the perspective of household decision-making, remittances can taper consumption variations and soften inflationary pressures. In this study, we probe whether rising inflation in remittance-recipient economies triggers the sending of remittances. In evaluating the impact of inflation in the Philippines, we found that increases in inflation can prompt the sending of more remittances from migrant relatives in the short run. More than the anticipation of remittances during inflationary periods, it was shown that remittances are not necessarily inflationary. There were other more dominant internal factors that can stimulate inflationary pressures. Thus, the usual arguments that remittances contribute to economic instability still warrant further investigations. © 2020 SOAS University of London.

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Digitial Object Identifier (DOI)

10.1080/0967828X.2020.1793685

Disciplines

Economics

Keywords

Inflation (Finance)--Philippines; Emigrant remittances--Philippines

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